Argentina’s new economy chief pledges fiscal ‘order and balance’ amid turmoil

Argentina’s new Economy Minister, Silvina Patakis, said Monday she will aim to reduce the country’s high fiscal deficit, vowing “order and balance” in a bid to tame soaring inflation, faltering markets and mounting pressure on the peso. .

Patakis, who took office last week after a surprise cabinet reshuffle, said Argentina will move toward positive interest rates, continue plans to cut energy subsidies and stick to targets agreed with the International Monetary Fund.

“We need to give some order and balance to the country’s public finances,” she said at a press conference in Buenos Aires. It pledged new measures such as linking budget quotas to “real cash projections” to achieve fiscal balance.

This means that we will not spend more than we have.”

The South American country, a major exporter of grain, is facing inflation estimated at 76% this year, pressure on the peso that has sent the dollar up on popular black markets and alarmingly low foreign exchange reserves.

This has been exacerbated by the rising global food and energy costs associated with the Russian invasion of Ukraine, which has fueled already high domestic inflation.

On Monday, sovereign bonds, already in distressed territory, fell 0.5%. The peso on the black market rose slightly to 270 to the dollar, but it was still more than double the official spot rate of 127 per dollar, which is protected by strict currency controls.

The crisis has caused splits in the ruling coalition between moderates over the president and a hard-left wing allied with powerful Vice President Cristina Fernandez de Kirchner, which supports more spending to alleviate poverty.

Patakis took office last week after his predecessor Martin Guzman, a close ally of the president, abruptly resigned after clashes with factions allied to the vice president, sparking investor fears of a shift toward more flexible economic policy.

On Monday, she pledged to increase production and exports, but stressed the importance of the country remaining able to meet its obligations.

Argentina, which has been going through economic crises for decades, has a $44 billion debt deal with the International Monetary Fund that was agreed earlier this year. Protesters took to the streets at the weekend to criticize the government and the International Monetary Fund. Read more

“We need to defend the solvency of the state. This has nothing to do with the demands imposed by the International Monetary Fund,” Patakis said.

(Reporting by Ileana Raziowski). Written by Nicholas Misculin. Editing by Adam Jordan and Jonathan Otis

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